Key Takeaways
- Trump’s proposed 10% tariff on Canadian crude is already slowing investment and decision-making in Canada’s oilfield services sector.
- Employment in the drilling industry was expected to reach its highest level in a decade, but this forecast is now uncertain.
- TD Cowen has downgraded Canadian drilling stocks and reduced its 2025 rig count forecast by 5%.
- Potential Canadian counter-tariffs could raise costs for drilling inputs like sand, which is crucial for fracking.
Impact on Canadian Oilfield Services
1. Drilling Activity & Investment at Risk
- Canada’s drilling sector was beginning to recover from a decade of job losses.
- However, uncertainty around tariffs is making companies hesitant to commit to new projects.
- Precision Drilling, Canada’s largest rig operator, saw a steeper-than-expected slowdown in Q4 2024.
📉 TD Cowen cut its 2025 rig count forecast from 185 to 175 active rigs due to the uncertainty.
2. Stock Market Reaction
- TD Cowen downgraded Precision Drilling & Ensign Energy Services from “buy” to “hold”.
- Investors fear tariffs could reduce demand for drilling services and delay new projects.
3. Job Market Concerns
- Canadian Association of Energy Contractors (CAOEC) had projected 2025 as the best employment year in a decade.
- Now, industry leaders warn of potential job losses if the tariffs are implemented.
- The drilling sector’s workforce is still only half of what it was in 2014.
Potential Canadian Retaliation & Market Consequences
If Canada imposes counter-tariffs, this could drive up costs for essential oilfield materials, including:
✅ Sand – critical for fracking.
✅ Drilling rig equipment – much of which is imported from the U.S.
Higher costs could further reduce drilling activity, creating a negative feedback loop for investment and employment.
Industry Outlook: What’s Next?
đź“Š Best-Case Scenario:
- Tariff uncertainty fades, drilling activity continues to grow, and investment rebounds.
⚠️ Worst-Case Scenario:
- Tariffs take effect, drilling slows further, job losses mount, and Canadian oil becomes less competitive in U.S. markets.
Industry leaders are urging policymakers to negotiate a solution before the damage becomes irreversible.
🔎 Conclusion: The Canadian oil sector is at a crossroads—whether it rebounds or faces another downturn will depend heavily on trade policies in the coming months.